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TMI Blog2023 (8) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... f the objects of the Appellant company fall within Explanation 3 to Section 80G. 2) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G to the Appellants merely because Row 3 of Form 10AB states that the trust is Charitable cum Religious and Row 5 of Form 10AB mentioned religious as one of the many purposes of the Appellant without considering the MOA evidences the trust to be solely constituted for charitable purposes. 3) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G without considering that s.80G(5B) permits expenditure for religious purpose for upto 5%. 4) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G by not considering that Courts have consistently held that it is the dominant object of the trust which is important and contribution and expenditure incurred by the Appellant trust has to be viewed in light of the objects with which charitable trust in question was constituted. 5) The Ld. CIT(Exemptions) has erred in law and on facts by not granting exemption under s. 80G without considering that the expenditure incurred till date is solely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 80G(5)(ii) of the Act which stipulates that the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not ,contain any provisions for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose and section 80G(5)(iii) of the Act stipulates that the institution or fund is not expressed to be for the benefit of any particular religious community or caste. The ld. CIT(Exemption) referred to provisions of section 80G(2)(a)(iv) of the Act and observed that it is applicable to the institution or fund established in India for charitable purpose, and there is no provision for transfer or application of fund for any purposes other than charitable purposes. The ld. CIT(E) also referred to provisions of Section 80G(5B) which prescribe that notwithstanding any thing contained in clause (ii) of sub-section (5) and Explanation 3 , an institution or fund which incurs expenditure , during any previous year, which is of religious nature for an amount not exceeding 5% of its total income in that previous yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature , and this has not been seriously disputed . Therefore, in our view, the Trust and the donation by the assessee to it fall outside the scope of section 80G. " The ld. CIT(E) held that Section 80G approval can be granted to the assessee/applicant who has to established for charitable purposes and there is no transfer or application of funds for any purpose , other than a charitable purpose, subject to concession granted to the extent of 5% of total income as per Section 80G(5B) of the 1961 Act. The ld. CIT(E) observed that Provision of Section 80G(5) approval cannot be granted to a trust/fund established for any purposes other than charitable purpose, i.e. religious or charitable cum religious purposes. The ld. CIT(E) referred to the decision of ITAT, Agra Bench in the case of Yug Chetna Parmarth Trust, reported in 44 taxmann.com 446 . The ld. CIT(E) observed that the assessee has itself accepted that some of its objects are religious in nature, and hence it was held by ld. CIT(E) that the assessee is not entitled to get approval u/s 80G(5) of the 1961 Act , and hence ld. CIT(E) rejected the application filed by the assessee in Form No. 10AB for grant of approval u/s 80G(5). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice No. , firstly ITBA/EXM/F/EXM45 / 2022-23/ 1050967825(1) dated 20.03.2023 and secondly with DIN & Notice No. ITBA/EXM/F/EXM45/2022-23/1050968270(1) dated 20.03.2023. It was submitted that these two orders are verbatim same except that in one order there is reference to notice/questionnaire dated 04.02.2023 issued by ld. CIT(E) and in the second order there is reference to notices dated 12.12.2022(questionnaire) and 05.01.2023 issued by ld. CIT(E) , but these two orders rejecting application for the assessee for grant of approval u/s 80G(5) are verbatim same. It was submitted by ld. Counsel for the assessee that the ld. CIT(Exemption) relied on the judgment and order of Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Ltd.( supra) to deny approval to the assessee u/s. 80G. Our attention was drawn to para 6 of the object clause of Memorandum of Association(MOA). Our attention was drawn to sub-section 5B of Section 80G. It was submitted that the assessee is a newly incorporated company u/s 8 of the Companies Act, 2013 , and was incorporated on 26.07.2022. Our attention was drawn to page 23 and 42A of the Paper Book where details of expenses incurred as well bank stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... une of 5% of the income can be incurred for religious purpose as per Section 80G(5B) and hence it cannot be said that the assessee cannot incur any expenditure for any religious activities as expenditure up to 5% is allowed by law itself. Our attention was also drawn to the Order of ITAT, Allahabad Bench, Allahabad, in the case of Nazareth Hospital Society v. DCIT (E) ITA No. 165/ALLD/2018 and also order of Pune ITAT in the case of Santshreshtha Gajajan Maharaj v. CIT(E) , in ITA No. 2004/Pun/2019 , and it was submitted that expenditure can be incurred only for the specified object as per object clause and the income of the institution/fund can be applied for charitable purposes as stated in the object clause , as provided under section 11(1)(a) of the Act. The assessee also submitted that undertakings were given before ld. CIT(Exemption) as were required by ld. CIT(E), and further that the assessee is also willing to give undertaking that the assessee will not engage itself in any religious activities and its expenditure towards religious activities shall not exceed 5% as permitted vide provisions of section 80G(5B). Thus, it was submitted by ld. counsel for the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther persons in general , irrespective of any considerations of sex, class, caste , community and/or religion. 3. To accept grants, donations , presents , gifts etc. from the parents of the students and from others and to deal with the same for the purpose of the trust. 4. To arrange , organize , publish books and participate in lectures , seminars, debates , fairs and conferences etc. for the diffusion of knowledge and for promotion of education. 5. To secure and maintain the movable and immovable properties for achieving the said objects. 6. To provide , support religious places renovation , historic places renovations/preservation, and similar causes. 7. To promote overall development of the child, education , cocurricular activities and leveraging the concept of New Education Policy of India. 8. To do all such other things as are incidental and conducive to the attainment of the above objects or any other object of general public utility." The assessee filed an application in Form No. 10A for grant of provisional approval u/s 80G(5) with department, on 08.08.2022. The provisional approval was granted by department on 15.08.2022 under clause(iv) of first proviso to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of religious activities, the assessee cannot be allowed approval u/s 80G(5) as approval u/s 80G(5) can only be granted to the institutions which are established for charitable purposes, for which reliance was placed by ld. CIT(E) on the judgment and order of Hon'ble Supreme Court in the case of Upper Ganges Sugar Mills Limited(supra). There is one more clause in the object clause in the MOA of the assessee which permits carrying on the religious activities, viz. clause 1, which reads as under: "1. to promote arts, commerce, education , charity , protection of the environment, climate, change initiatives , sports, science, research , social welfare , healthcare, animal welfare , literature, religion(all religions)," The ld. CIT(E) had also observed that the assessee has itself admitted in its application filed with department for grant of approval u/s 80G(5), that its activities are Charitable Cum Religious. Thus, it is the assessee's own admission that it is engaged in religious activities, which debars it to get approval u/s 80G(5). The assessee has claimed before us that the assessee is not carrying on any activities which are religious in nature and it did not intend to ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of efficient and robust judicial delivery system. Merely issuing questionnaire and thereafter condemning assessee without confronting and granting opportunity to the assessee to explain its stand, defeats the very principles of natural justice . Nobody should be condemned un-heard. Further, it is observed that the ld. CIT(E) is required to call for such documents or information from the assessee and make such inquiries as he think necessary to satisfy itself about the genuineness of the activities of such institution and the fulfilment of all the stipulated conditions as are mandated in the Act and /or Rules. These inquires requires investigation of the facts and the law is then required to be applied to proven facts , to arrive at the decision on merits in accordance with law . The ld. CIT(E) has not conducted proper inquiries in the instant case before rejecting the application filed by the assessee for grant of approval u/s 80G(5), and principles of natural justice are also clearly breached. The assessee on its part is also required to submit all details/clarification/ documents etc. to enable ld. CIT(E) to take decision in accordance with law on merit before granting approval ..... X X X X Extracts X X X X X X X X Extracts X X X X
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